Comment on this story
Maryland Gov. Wes Moore spent the first eight months of his term delivering good news to fellow Democrats, supporting their policies and promising to bring about overdue and systemic change.
But Maryland’s records don’t show good news for Moore.
As he works to deliver on his transformative campaign promises, state analysts are forecasting budget deficits to soar to $1.8 billion annually after his term ends — thanks in large part to an ambitious education program being implemented by Democrats in the United States State is popular. Moore’s solution is to boost the economy — a solution he plans to present to hundreds of government officials gathered at an annual conference on the beach on Saturday.
Maryland’s lackluster economy needs to change, he said in an interview, and he needs your help in his plans to revitalize it.
“There’s no reason to look at the assets that we have in the state of Maryland and then go, ‘Oh, by the way, our economy is the same size it was four years ago,'” Moore said Thursday. “That makes absolutely no sense. And it just means we had no intention and our economy was rotten.”
The data backs him up: Adjusted for inflation, Maryland’s economy grew a meager 0.2 percent between 2018 and 2022, compared to 3.1 percent in neighboring Pennsylvania and 7.5 percent nationally.
In some respects, Moore’s message is not new: the first politician to start his career as an investment banker campaigned for Maryland as “wealthy and poor in strategy.” But sounding the alarm — and dampening policymakers’ expectations — marks a shift in tenor for a governor who has hitherto played the role of flatterer.
A rising star in the Democratic Party, he has raised money for other governors across the country and served as President Biden’s deputy on national talk shows. Just last weekend he showed up in Martha’s Vineyard for a fundraiser with Vice President Harris.
At home, he has vowed to end child poverty, narrow the racial wealth gap, lower taxes on pensioners and launch major infrastructure projects. He plans to replace the aging American Legion Bridge, build a new transit line, the Red Line, in Baltimore and halve the state government’s historically high vacancy rate — ambitious goals that have drawn praise and curiosity, like he will reach her.
The underlying message of his scheduled speech in Ocean City on Saturday is that the state cannot afford to leave systemic problems unsolved, but business must allocate more resources to solve them.
“Our obligation to be brave and our obligation to be financially responsible do not have to be in conflict,” Moore said.
“There was no growth,” he continued, adding, “There’s no excuse. And we fall behind. … We have to make a decision that we actually want to win.”
The economic picture Moore seeks to highlight will detail a state that for decades has relied on the federal government as its primary employer and has still not regained the jobs lost during the pandemic, even as the country as a whole has added millions of new jobs; a state population that is declining while the population of the country and the mid-Atlantic region is increasing; and a state with a sluggish gross domestic product that is outstripping national and regional growth. According to his government, Maryland’s economy has grown at half the rate of the rest of the country over the past decade.
“The private sector in Maryland is largely stagnant,” said Anirban Basu, chairman and CEO of Sage Policy Group, a Baltimore-headquartered business and policy consulting firm.
Basu said Maryland has a low unemployment rate, not because the job market is competitive, but because people have stopped looking for work here and have moved elsewhere.
“This is the main evidence that the state is losing human capital and that there are other communities across the country that are viewed by job seekers as a more dynamic and maybe even more livable place,” said Basu, who served as undersecretary for economic affairs during the second term of office Republican Governor Larry Hogan. Maryland has not been able to translate its high concentration of expertise into commercial deals, he said.
“The political decision-making community just can’t do it,” Basu said. “We’re a juggernaut in terms of research and discovery, but not in terms of commercialization.”
Moore plans to encourage the insider group at the Maryland Association of Counties annual conference to help him get it right.
He calls for the state budget to be used to invest in high-growth industries linked to the state’s existing economic infrastructure, including the headquarters of cyber and security institutions like DISA and the NSA, and higher education institutions like Johns Hopkins University and the University of Maryland system . He has no plans to offer specific stimulus on Saturday and in June established the Maryland Economic Council, which is due to come up with recommendations by January.
“This is about how we are reshaping our economy and realigning it for the future,” Moore said, citing his goals for Maryland to become the “Offshore Wind Capital of the World” and a leader in artificial intelligence and technology to make cyber.
More broadly, these growing industries would make Maryland less dependent on federal government investment, the medical industry, and higher education, three currently dominant forces.
“We have the assets to build on. It just requires a conscious investment measure,” he said.
Maryland’s balance sheets, like other states across the country, have been bloated by pandemic relief and additional earnings from active stock markets, resulting in historic surpluses that at times exceeded $7.6 billion. And while state leaders are putting more than $2 billion of that into savings accounts, the economy cannot support planned spending, including a plan to transform public schools in ways that improve performance and invest heavily in students from lower-income areas.
According to a June report by the Maryland Department of Legislative Services, Maryland’s revenue is expected to grow 3.3 percent annually for the next several years, while planned spending is expected to increase 5.1 percent.
The same report noted that the state budget is expected to be in balance at $150 million next year, but will post a budget deficit of $418 million the following year. By 2028, the gap is $1.8 billion — and that doesn’t factor in spending on new initiatives Moore has promised.
Heads of state routinely face and fill budget gaps without making deep cuts in public services. Moore’s staff said 17 of the last 20 households also had built-in deficits.
Some prominent lawmakers have floated the possibility of rewriting tax laws to make higher earners and corporations pay more to raise money for the education plan.
Saturday’s speech may also serve to set expectations for local government officials, who receive about 18 percent of the $63.1 billion state budget.
“When I go out and talk about the challenge we face and the fact that we need to create better ways and better mechanisms for economic growth, I don’t expect much opposition from local jurisdictions,” Moore said. “Because they understand it and have seen how it affects their balance sheets over long periods of time. … We have the assets. But if you look at our balance sheet, it doesn’t reflect that.”
More coverage of Maryland
Check out 3 more stories
Comments are closed.